Today, in Russian-speaking countries, such a way of earning as investing is only gaining momentum. The investment market is populated by active brokers, investment companies, funds and other participants. Only those who have a good financial education and experience in investing can feel at ease here.
However, according to popular advertising, literally everyone can invest! How to increase your capital to an ordinary citizen and not get into the number of robbed simpletons? The answer is simple: purchase an investment share in a unit investment fund.
What is a mutual fund?
Mutual fund (unit investment fund) is a type of association, which is formed by shares (units) private investors. Legal entities do not participate in the activities of mutual funds, and management is carried out by an authorized person or company-manager. If desired, the shareholder has the opportunity to sell the share allocated to him. The money received can be invested in a new project or spent. The manager's income includes two to three percent of the profit.
Investment share of a mutual investment fund: apples and profit
As an example, clearly illustrating the essence of the mutual fund, we can consider the following situation.
Four friends buy a young apple tree from the owner of the garden, which, along with others, continues to grow in its place. Friends expect to wait for the time when the apple tree grows up, begins to bear fruit and they get delicious apples.
They paid the specified amount and left the owner to take care of the purchased tree. The owner of the garden provides all his plants with equal care, and after a few years the tree gives its first fruits. Each of the four friends receives the first kilogram of fruit. One of the apples belongs to the owner of the garden for his work: watering, fertilizing, whitewashing and digging a tree.
Growing, becoming tall and powerful, the apple tree can bring more and more crops. Each year, friends collect more apples, and the owner of the garden also gets his share. Each of the group of buyers can at any time switch from consuming apples to cherries or plums. To do this, it is enough for him to sell his share to another participant or owner of the garden. In this example, a tree is a mutual fund, and the owner of the garden is the manager.
What are mutual funds
Mutual investment funds are divided into several main types, taking into account the securities included in their structure, or the investment vector:
- Bond mutual funds. In many ways, it looks like a bank deposit, since the manager monitors the market and buys bonds of the most successful enterprises. According to experts, such investment activity is justified during the financial crisis, since the risk level is minimal. Estimated earnings are 15-50% per year.
- Promotional mutual fund. Owners of investment units of such a fund entrust the management company with the acquisition of shares in various enterprises. The growth of quotations as a result of exchange trading indicates an increase in shareholders' profits. However, when the shares become cheaper, investors lose part of the invested funds or the entire amount. Such investment is regarded by experts as relatively risky, because it is not easy to anticipate stock price fluctuations.
- Mixed mutual funds. The structure of this fund includes both bonds and stocks.Such associations are distinguished by the flexibility of their behavior in the market, since they can change the specific weight of the securities included in their composition. The investor can count on getting the maximum profit and get some protection against risks by acquiring such an investment share. A security (stock or bond) is sold and bought in such a way as to preserve the available capital and receive additional profit.
- Venture mutual fund. By investing in such a fund, investors take part in the development of innovative projects. The manager is engaged in the purchase of securities of the relevant organizations and enterprises, hoping for their success. According to statistics, about 70% of such investments not only do not bring profit, but also appear unprofitable. True, in the event of a successful combination of circumstances, the profit from one investment covers all the damage received.
- Mortgage Unit Investment Fund. The object of investment of such associations is real estate. The management company invests an investment share of each participant in the purchase of residential or commercial real estate.
- Hedge mutual fund. The responsibilities of managers of such mutual funds include finding ways to increase the value of shares in any circumstances: both during market growth and during a recession. These investments are considered risky, as there is no guarantee that the chosen strategy will be the right one.
Mutual fund investment unit: advantages of unit ownership
Among the obvious advantages that mutual funds can offer their investors are the following:
- You can start investing with a minimum amount (the value of some units is only a few hundred rubles).
- The government controls the operation of mutual funds, which prevents the scammers from conducting their illegal business.
- There is no need to pay taxes on the amount that is invested in the fund.
- You can achieve a greater economic effect on capital than with real estate investments or by placing it in a bank.
- Entrusting his money to professional managers, the investor is not required to understand the intricacies of the stock and foreign exchange markets.
- An investment share can be sold very quickly, in almost a few days.
Disadvantages of owning investment shares
Along with the possibility of obtaining higher profits, equity participation in mutual funds implies sharing by investors of possible risks (their level is quite high). 
The choice of a successful mutual fund can be difficult for the layman, as there are quite a lot of different funds today. In addition, regardless of the effectiveness of the mutual fund, the management company will in any case receive its contributions.
What determines the value of a share
An investment share is a security devoid of face value. During the formation of a mutual fund, the price of all shares is determined by the management company and is fixed for a certain period of time (several months). Then, when the capital is collected to participate in the auction, managers proceed to exchange operations. From this moment, the value of the investment share is determined as follows: the entire capital of the mutual fund, minus management costs, is divided by the number of investors. Managers are required to publish the value of the unit in the press, so that investors are able to monitor its growth or decline.
In the first case, we can conclude that successful, profitable transactions were conducted, in the second, that investors incur losses.
Participating in the mutual fund, all investors have absolutely equal rights. An investment unit or units does not allow an investor to make decisions on any transactions. There is no controlling stake or board meeting. Only the management company manages the money invested in the mutual fund. If the investor does not agree with her strategy, he can leave the association at any time.
Share sale
Sale is the redemption of investment shares, that is, receiving money in exchange for the right to participate in a mutual fund.
When redeeming a share, the type of mutual funds is taken into account: open, interval or closed.
In the first type of agreement there are no restrictions on the redemption of units; these operations can be carried out every day. Intervals stipulate with investors the right to redeem their shares only in certain periods (at least once a year).
Closed mutual funds do not allow you to sell your shares ahead of schedule.
Nuances of equity investment in mutual funds
The declared unit value may slightly differ from the actual value. This is due to the costs of the management company to organize tenders. Therefore, the investor should be prepared for the fact that the price when buying a share may be slightly higher, and when selling below the published one. However, the difference cannot be more than 5%.
